What is education or financial culture?
According to the Organization for Economic Cooperation and Development (OECD) , education or financial literacy is “the process by which investors and financial consumers improve their understanding of financial products, concepts and risks and, through information, teaching and / or objective counseling, develop the skills and confidence needed to become more aware of financial risks and opportunities, make informed decisions, know where to go for help and take any effective action to improve their financial well-being.
Importance of financial education
The financial illiteracy suffered by today’s society is widespread and people lack knowledge of the most elementary and basic economic principles and concepts.
In recent years, due to the development of new financial methods, the need for knowledge of this subject has increased in order to avoid doubts and mistrust in making financial decisions. Also, that the financial world is very complex.
Currently, many international and multilateral organizations are aware of the lack of financial culture and therefore promote improvements through programs and collaborations linked to this challenge. Translating this way into direct benefits for the population and also for the sustainability of the financial system.
Influential factors in the needs of financial culture
There are certain factors that motivate an increase in the demand and supply of financial products that motivates a greater complexity in the information relative to them. Three of these factors that can be highlighted are:
Variations in the conditions of the market
It refers to the risks that investors take in making decisions . The change of market conditions in returns, interest rates and other aspects means that, on many occasions, they are not fully aware of what the different investment operations entail.
Innovations of the financial system
Financial innovations have developed a variety of alternative financial products to traditional ones such as new companies developed by the Fintech sector, which, if you do not have a good financial culture, there is a certain confusion before them creating thus generating a greater training deficit.
Increase in competition
There is an increase in the competition of financial entities that sell financial products to retail investors considering this as all those investors who do not have enough experience and knowledge to make large investments.
Situation of financial education in Spain
Given the needs of financial culture, Spain is one of the countries that does not have the necessary training of young people and families to operate consciously in financial markets, that is, the existence of gaps in basic financial concepts causes impulsive actions that do not contain prior analysis of the consequences.
Also, many companies take advantage of this lack of training, creating unnecessary needs among savers for the hiring of unfamiliar financial products.
The Secretary of State for Education, Marcial Marín affirms that the current financial education plan “remains to be developed” in the financial education plan, since 80% of Spaniards admit having “insufficient or bad” knowledge to this respect.
The latest studies conducted in this field show disappointing results that place approximately half of the Spanish population as lacking sufficient financial information and their products. Therefore entities such as the Bank of Spain, OECD, ACADE, ADECOSE … and other collaborations, propose plans for the promotion of financial education that since 2013 have been renewed. Thanks to these plans, the results are getting better, creating greater awareness among the population and making financial decisions more effective.
Other actions that improve financial education in Spain
To improve all this, from MytripleA we have developed a financial dictionary where anyone can learn about financial and economic concepts explained from one to one.
In addition, we explain our investment and financing products without small print and with clear things so you do not have any doubts about them.